A Norwegian energy company plans to spend nearly $1 billion acquiring a significant stake in the Lackawanna Energy Center in Jessup from a BlackRock subsidiary.
In a press release referencing growing electricity demands from data centers, Equinor ASA announced it has agreed to spend $940 million on shares in the 1,485-megawatt natural gas power plant on Sunnyside Road in Jessup. Chicago-based Invenergy, which developed the Lackawanna Energy Center, will continue to manage and operate the facility, according to the Aug. 17 news release. Headquartered in Stavanger, Norway, Equinor is an international energy company with a presence in 20-plus countries, including the United States and Canada, according to its website. Equinor is a major supplier of energy in Europe, with its portfolio including oil and gas projects, as well as renewable energy.
The acquisition comes as Northeast Pennsylvania emerges as a hot spot for largely speculative data center development. Within the immediate vicinity of the power plant, Jessup and Archbald alone have 58 proposed data centers across eight projects, including one data center on land adjacent to the Lackawanna Energy Center. There are at least two more data centers on the horizon in the Archbald portion of the Valley View Business Park.
The rapid proliferation of data center proposals has led to a push for more power generation projects as data centers outpace new power plants. A joint venture involving PPL Corp. spent $40.4 million on land in Luzerne County this year for possible power plants to fuel data centers. Companies linked to a Lackawanna County data center developer propose three natural gas power plants on Bell Mountain in Dickson City and another on Eynon Jermyn Road in Archbald, totaling a gigawatt of power across the four plants.
Equinor is acquiring its stake in the Lackawanna Energy Center from funds managed by Global Infrastructure Partners — a subsidiary of BlackRock, according to the press release. BlackRock is one of the world’s largest asset managers with a portfolio topping $15 trillion.
Construction on the three-turbine Lackawanna Energy Center began in early 2016 following numerous contentious meetings and hearings in Jessup as Invenergy sought the necessary approvals for its power plant. The plant became fully operational in January 2019. A 7½-year-old press release announcing the operations noted that a fund managed by BlackRock Real Assets’ Global Energy & Power Infrastructure team was a major investor in the project.
Equinor’s acquisition will include 87.71% of Class A shares in the power plant, giving it preferential dividend rights — meaning Equinor would have priority when it receives dividends from the power plant. The remaining Class A shares and 100% of Class B shares remain with the limited liability company Invenergy AMPCI Thermal Power.
The Norwegian firm said it will work with Invenergy to “explore additional collaboration opportunities that leverage Invenergy’s long-standing operating capabilities and position in the existing PJM power market.”
PJM Interconnection LLC is the largest grid operator in the country. It oversees the grid in Pennsylvania, a dozen other states and Washington, D.C., providing power to about 67 million people.
Reflecting the already-strained grid, PJM received approval via emergency orders from the U.S. Department of Energy multiple times this summer to temporarily allow data centers to rely on their backup generators for power to supplement the grid and avoid blackouts during sweltering weather. Data centers account for 30 of the 32 gigawatts of forecasted electricity demand increases between 2024 and 2030, according to PJM.
Equinor references that rising demand in its announcement.
“Electricity demand in PJM is growing rapidly, driven by electrification, data centres and industrial activity. This acquisition gives Equinor further access to the largest power market in the US and is located close to our significant Appalachian gas position,” executive vice president for power Helge Haugane said in a statement. “It also provides early cash flow and long-term value potential. We look forward to working with Invenergy as an experienced operator and exploring further collaboration.”
Equinor characterizes the Lackawanna Energy Center as one of the largest and most efficient gas-fired power plants in the PJM market.
The transaction is subject to regulatory approvals, and the $940 million sale price could be reduced at the closing of the sale, according to Equinor.